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Can I Afford to Retire? Pre-Retirement Webinar Series

Session 1

Aug. 13, 2019

131-3105

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Today’s Presenters

Grace Pomroy Senior Financial

Educator

Mark Duder, CFP® Portico Financial

Planner

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Today’s Agenda

• What’s my picture of retirement?

• How much does my retirement picture cost?

• Can I afford my retirement picture?

• How can I make the most of my remaining working years?

• Closing Questions?

Email Portico Customer Care at mail@PorticoBenefits.org

Put “Pre-Retirement Webinar ” in the subject line

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Who is Portico Benefit Services?

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What’s my picture of retirement?

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What does retirement mean to you?

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What’s your picture of retirement?

Spending Your Time

• Part-time job • New career • Volunteer • Hobbies • Activities • Travel

Choosing Your Residence

• Current home • New home, in

state • New home, out

of state • Another country • Don’t know yet

Financing Your Vision

• Lifestyle • Large

purchases • Relocation • Health care

Caring for Others

• You • Spouse • Children • Grandchildren • Parents • Others

Consider: What would your ideal day look like?

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Sally & Dan’s Retirement Picture*

• Planning to move and purchase their first home in a bigger city

• Focusing on volunteering, traveling, and grandkids

• Not planning to work in retirement

*Hypothetical, for illustrative purposes only.

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Nancy’s Retirement Picture*

• Mortgage paid off, continue to live in her current home

• Work part-time • Enjoy pottery and

volunteering

*Hypothetical, for illustrative purposes only.

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How much does my retirement picture cost?

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Know Your Annual Expenses in Retirement

• What might your expenses be in retirement? – Is the expense recurring or one-time? – Does it vary from year to year? – How much is necessary vs. discretionary? – How much is fixed vs. variable?

• How might inflation affect you? • How might these expenses change for your survivor, if

applicable?

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Category Today Retirement FICA/SECA tax $10,400 $0 Retirement savings $10,400 $0 Work-related expenses $3,300 $0 Income tax $20,000 $20,000

Housing $12,000 $18,080 Transportation $3,000 $5,000

Clothing $4,000 $4,000

Personal care $3,000 $3,000

Food $10,000 $15,000

Entertainment $5,200 $9,000 Charitable giving $18,000 $18,000

Medical $8,000 $12,000 Other insurance $4,700 $7,920 Total $112,000 $112,000

Sally & Dan’s Annual Retirement Spending*

*Hypothetical, for illustrative purposes only.

Track your spending and create or refine your budget. Consider how your budget might change in retirement.

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Category Today Retirement FICA/SECA Tax $5,200 $2,500 Retirement savings $5,200 $2,500 Work-related expenses $3,250 $1,500 Income taxes $11,050 $5,525

Housing $12,000 $2,000 Transportation $3,550 $3,550

Clothing $2,350 $2,350

Personal care $1,950 $1,950

Food $5,000 $5,000

Entertainment $2,600 $4,000 Charitable giving $6,500 $4,600

Medical $4,000 $6,900 Other insurance $2,350 $4,000 Total $65,000 $46,375

Nancy’s Annual Retirement Spending*

*Hypothetical, for illustrative purposes only.

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Age 65

Age 57

Age ?

8 Years

? Years

What is your retirement timeline?

Today End of retirement

Beginning of retirement

How many years

How many years

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How long might retirement last?

Calculations are for a 65-year-old heterosexual couple based on mortality data from the Society of Actuaries Retirement Participant 2000 Table. Source: Vanguard https://personal.vanguard.com/us/insights/retirement/plan-for-a-long-retirement-tool

0%

10%

20%

30%

40%

50%

60%

70%

80%

Single Man SingleWoman

Either Personin the Couple

% Probability of livingto age 85% Probability of livingto age 90

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Retirement Timeline Examples

Today End of retirement

Beginning of retirement

How many years

How many years

Nancy 65 yrs. old Nancy: 93 yrs. Nancy

67 yrs. old Nancy: 27 yrs. 2 years

Sally & Dan 55 yrs. old

Dan: 88 yrs. Sally: 90 yrs.

Sally & Dan 65 yrs. old

Dan: 23 yrs. Sally: 25 yrs.

10 years

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Historical Inflation Rates

2.8%

4.1%

2.2%

2.1%

1.8%

1919 – 2018 (100 yrs.)

1969 – 2018 (50 yrs.)

1999 – 2018 (20 yrs.)

2004 – 2018 (15 yrs.)

2009 – 2018 (10 yrs)

Source: Bureau of Labor Statistics www.bls.gov/cpi

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Years 3% Inflation 4% Inflation

0 $60,000 $60,000

5 $70,000 $73,000

10 $80,600 $88,800

15 $93,500 $108,100

20 $108,400 $131,500

25 $125,600 $160,000

30 $145,600 $194,600

Impact of Inflation on Your Retirement Income Needs

Note: Figures rounded to the nearest $100

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Can I afford my retirement picture?

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Retirement Planning Tool: Retirement Profile

• ELCA account information is already included

• Estimates Social Security income, retirement age, and how much income you may need

• You’ll need to enter your spouse’s income (if applicable)

Use the Retirement Planning Tool to see if you are on track for your retirement goals. Find it in the Retirement Center tab under Tools & Information on myPortico.

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Retirement Planning Tool: Risk Tolerance

5 1 2 3 4 Targeted Lower Risk & Return

Targeted Moderate Risk &

Return

Targeted Higher Risk &

Return

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Retirement Planning Tool: Level of Confidence

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Retirement Planning Tool: Retirement Income

• See if you have a surplus or gap

• Add other retirement account balances like:

- IRAs

- Spouse’s 401(k)

• Add other retirement income sources like:

- Pensions

- Part-time work

- Inheritance

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Retirement Planning Tool: Recommended Plan

Sally & Dan: Gap • Increase pretax

contribution • Reallocate

investments • Retire later

Nancy: Met goal • Increase pretax

contribution • Reallocate

investments

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Retirement Planning Tool: Customized Plan

Nancy: Exceeded + sustained goal Sally & Dan: Even larger gap

This presentation is for informational purposes only, does not constitute an offer to sell any investment, and may be subject to changes and corrections. An offer for the sale of interests in the funds will only be made through the ELCA Investment Fund Descriptions document, which is available upon request.

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This presentation is for informational purposes only, does not constitute an offer to sell any investment, and may be subject to changes and corrections. An offer for the sale of interests in the funds will only be made through the ELCA Investment Fund Descriptions document, which is available upon request.

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Choosing Your Funds Select Series

ELCA 40e Balanced Fund

ELCA 60e Balanced Fund

ELCA 80e Balanced Fund

ELCA Social Purpose 40e Balanced Fund

ELCA Social Purpose 60e Balanced Fund

ELCA Social Purpose 80e Balanced Fund

Build-Your-Own

ELCA Money Market Fund

ELCA Bond Fund

ELCA High-Yield Bond Fund

ELCA Social Purpose Bond Fund

ELCA U.S. Stock Fund

ELCA Social Purpose Stock Index Fund

ELCA Social Purpose U.S. Stock Fund

ELCA S&P 500 Stock Index Fund

ELCA Small/Mid Cap Index Fund

ELCA Non-U.S. Stock Fund

ELCA Social Purpose Non-U.S. Stock Fund

ELCA Global Stock Fund

ELCA Social Purpose Global Stock Fund

ELCA Global Real Estate Securities Fund

This presentation is for informational purposes only, does not constitute an offer to sell any investment, and may be subject to changes and corrections. An offer for the sale of interests in the funds will only be made through the ELCA Investment Fund Descriptions document, which is available upon request.

28 For Those Age 55+: Enhanced Retirement Income Focus

• Project future household budget needs

• Model ELCA Participating Annuity options

• See how specific actions taken while still working can impact your future potential income stream

• Use the tool with a Portico Financial Planner to take full advantage of its value

Hypothetical, for illustrative purposes only. Actual performance will vary.

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How can I make the most of my remaining working years?

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Meet Anna 58-year-old

• Earns $59,000/year

• Makes an additional 3% monthly pretax contribution on top of her employer’s contribution

Contribute 3% More Per Month

$24,000*** at retirement

Monthly contribution to Anna’s ELCA

Retirement Account:

$148

Reduction in Anna’s monthly paycheck:

$1001

Contributions and corresponding returns

could add up to:

$24,1232

Additional monthly income:

$783

after taxes

in retirement

Hypothetical, for illustrative purposes only. Actual performance will vary. 1https://nb.fidelity.com/public/nb/401k/tools/calculators/takehomepay calculated using 25% federal tax rate, 7% state/local tax rate. 2https://communications.fidelity.com/wi/powerofsmallamounts/#/results; assumes retirement age of 67, 5.5% investment growth rate, salary growth of 4% (2.5% inflation + 1.5% real salary growth rate). Accumulated retirement savings shown in future dollars. 3http://www.bankrate.com/calculators/retirement/retirement-plan-income-calculator.aspx calculated using $0 starting balance, $1,776 annual contributions, current age 52, retirement age 67, 30 years in retirement, 7% pre-retirement investment returns, 4% retirement investment returns, 25% current tax rate, 15% retirement tax rate, 2.9% inflation. Reported after taxes and inflation.

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Retirement Plan Contributions

How much can I contribute? • Up to the IRS limit of $19,000 per year in 2019 • An additional $6,000 per year “catch-up” contribution

if you reach age 50 in 2019 NOTE: You may be able to make additional contributions if you have completed 15 years of service with an ELCA organization

What does my employer contribute?*

• At least 10% of defined compensation for rostered ministers

• At least 6% of defined compensation for lay employees sponsored by congregations

What is the maximum amount my employer and I can contribute?

Lesser of 100% of taxable compensation or $56,000 in 2019 (not including “catch-up” contributions)

When are my and my employer contributions vested?

All ELCA Retirement Plan contributions are immediately 100% vested

*See the ELCA Retirement Plan Summary Plan Description or call the Portico Customer Care Center for more information.

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Modifying Your Picture of Retirement

Reduce Income Needs Work in Retirement

Retire Later

Did you know? Working 3 – 6 months longer can boost retirement income by as much as increasing retirement contributions by 1% over 30 years of employment.

Source: http://www.nber.org/digest/may18/w24226.shtml

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Sally & Dan’s Remaining Working Years

1. Reallocate their investments

2. Retire one year later 3. Increase pretax contributions

to their retirement accounts

4. Start a relationship with a Financial Planner

5. Modify their vision of retirement

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Nancy’s Remaining Working Years

1. Reallocates her investments

2. Increases pretax contributions to her retirement account

3. Checks in with her Financial Planner

Determine how you will make the most of your remaining working years.

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Portico Walks With You – In-House Financial Planners

• Are plan members like you, appreciate the realities and blessings of ministry

• Don’t work on commission, available at no additional cost to you

• Can walk you through the Retirement Planning Tool and help you adjust your plan

• Know ELCA investment options inside and out, including Social Purpose funds

Call us at 800.922.4896

Start a relationship with a Portico Financial Planner or check in with your own financial planner.

This presentation is for informational purposes only, does not constitute an offer to sell any investment, and may be subject to changes and corrections. An offer for the sale of interests in the funds will only be made through the ELCA Investment Fund Descriptions document, which is available upon request.

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Closing

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4 Things You Can Do Today

1. Create your picture of retirement, including your larger goals as well as your day-to-day activities.

2. Complete a budget that aligns with your picture of retirement. 3. Use Portico’s Retirement Planning Tool to see if you’re on

track for your retirement goals and explore how you might make the most of your remaining working years.

4. Start a relationship with a Portico Financial Planner or check in with your financial planner.

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Next Steps

• Post-webinar survey

• Follow-up email • Session 2: Can I Create a Sustainable Income in Retirement?

Aug. 20 at 2 p.m. (Central)